Corporate FD: If you want to include fixed deposits in your portfolio, then invest in corporate FD instead of bank and post office. In this, you can get better interest than bank FD. Know its benefits and other important information.
Corporate FD: Despite the availability of many investment options, there are many people who still believe in Fixed Deposit the most. Experts also believe that there should be many different schemes in your financial portfolio and everyone should include FD in their portfolio. Usually people invest in bank and post office FD, but if you want more profits and to bring variety in the portfolio, you can also invest in Corporate FD. Here you can get better returns than bank FD and post office FD. Know the benefits here.
What is Corporate FD
Corporate FD is issued by many companies. Through corporate FD, companies raise funds from people to meet their needs. This FD also works exactly like a bank FD. For this, the company takes capital from investors for a fixed period and returns the amount along with interest to the customers. To attract people, better interest is offered in corporate FD than in bank FD.
How much profit can be earned?
By investing in a bank, you will get 5 to 7 or 7.5% interest, but by investing in corporate FD, you can get 8 to 10% return. Generally, the maturity period of corporate FD is 1 to 5 years. Like banks, the interest rate can be different for different periods. Just like senior citizens are given additional interest on FD in banks, in the same way, senior citizens are also given additional interest in corporate FDs as compared to normal FDs. But along with the high interest rate, there are some risks associated with corporate FDs, which you should know. If you can take the risk, then corporate FD can prove to be a better option for investment.
What are the risks of corporate FDs
Generally, bank FD is considered a safe investment option because strict rules of the Reserve Bank are followed in it. But corporate FD has a little more risk than bank FD. If the bank collapses, the deposited amount gets insurance benefit under DICGC, but there is no such insurance on corporate FD. If the company collapses, your money can also be lost. However, if you invest in companies with good ratings, the risk can be reduced significantly.
How to choose a company for investing in Corporate FD
If you have decided to invest in corporate FD, then invest only in companies with high credit rating. Before investing in corporate FD, check the 10-20 year record of that company. Invest only in those companies which are making profits. If companies with AAA or AA rating are offering FD, then you can invest in them.
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